While our American cousins still marvel at the wonders of tap-and-go, in the same way that Homo erectus marveled at the wonders of fire, Australians confidently use the payment system for approximately 80% of point-of-sale transactions. Checks are set to disappear, while hard cash will likely be relegated to emergency purposes.
The RBA – which has been a key driver of the digital economy through its NPP – has argued that going cashless would make it easier to combat money laundering and other financial crimes. This might save the country a few billion here and there, but it also makes it more vulnerable to cyberattacks.
When we talk about cyberattacks, we usually come across the Hollywood stereotype of hackers – black hoodies, scrolling green text, meaningless jargon, etc. But the average cyberattacker is no longer a script kiddie working in a grimy internet cafe. These are military personnel with years of training and budgets of hundreds of millions of dollars at their disposal.
And while we have one of the best digital economies in the world, the digital and physical infrastructure that supports it isn’t exactly top-notch.
More than three-quarters of Australians do business with one of the big four. This means that most of Australia’s money is held by four institutions with fairly poor cybersecurity records. Westpac and CBA’s breaches of AML/CTF legislation have shown the world that Australian banks are not paying close attention to what is happening in their IT systems, and the RBA has also noted that the big four have weaknesses systemic problems created by their use of common third parties. party software. All of this combines to make them big, lucrative targets – and it’s only a matter of time before someone decides they want a piece.
In 2016, North Korean hackers stole $100 million from Bangladesh’s central bank. Other groups linked to North Korea siphoned $10 million from the Bank of Chile and $13.5 million from Cosmos Bank in India. These types of cyberattacks are actually relatively harmless because they are motivated by a profit motive; According to some theories, bank fraud of this type actually accounts for a significant portion of North Korea’s GDP.
But if a hostile state wanted to cause real damage, it could very easily do so. For example: a coordinated attack on key utilities (electricity, water) and financial infrastructure that prevents people from accessing their money. Any cyberattack on a primarily digital economy will likely be far more devastating than those that use more physical currency simply because basic goods and services become inaccessible. Of course, the value of physical currency would likely be impacted by a large-scale cyberattack, but it would likely not cease to be impacted. exist.
If we want to become a digital economy in the future, then our financial institutions must improve their standards. Systems are already suffering from general outages; identity fraud is becoming more and more sophisticated; and the fact that much of our economy is digital means that any attack will likely have far-reaching ramifications.
At least part of the problem could be solved by creating a single, secure digital identity for Australian citizens. A single digital identity – created with the government and verified by a third party – would mean customers wouldn’t keep dozens of passwords for different profiles and accounts containing their financial information. However, it would also create a single point of failure that could be easier for a sophisticated cyberattacker to exploit.
The Australian government and financial services should also focus on responses and resilience, i.e. how the infrastructure underpinning the digital economy withstands a cyber attack, and how the government responds does he? Cyberattacks are inherently deniable, but creating a decisive response plan based on real-world consequences could prove an effective tool to ward off future attacks.
Australia is leading the world in progress in the digital economy, and it is one of the country’s greatest success stories. But if we don’t do more to modernize and protect the infrastructure that supports this economy, we could see our best work become our worst nightmare.
